Customer Retention is a measure of a company’s ability to retain its customers and the amount of long term customer relationships it maintains as well as the process of achieving retainment. While marketing and sales works to attract new customers and more attention, customer retention is what is done to maintain a good relationship with existing customers.
When you retain a customer what you are doing is building brand loyalty so that they keep coming back to purchase your products and services. The fact of the matter is that long term customers that are satisfied with the products or services a company is offering are the best kind of security. Their loyalty will have them coming back without the need to use too many sales pitches or flashy discounts.
There are many different strategies you can follow to improve your customer’s loyalty; such as having an outstanding customer service team or retain your customers through surveys, such as the simple microsurvey one from Customer Thermometer. The most important aspect of having a growing rate of customer retention is that loyal customers are more likely to attract more customers. They are bound to at least mention how happy they are with their customer experiences and depending on exactly how happy they are, the people that hear about their experience will want to try it for themselves.
How customer retention relates to business growth
Businesses that are able to achieve a high level of customer retention on a regular basis also achieve a much higher percentage of growth. With each new customer the goal should be to do your best to retain them. If you manage to keep a gross majority of new customers consistently, the rate of growth will most likely increase in relation to the percentage increase in your retention rate.
Apart from growth in terms of customers, a superior percentage rate will also boost profits considerably. When comparing the cost of attaining new customers and maintaining those that already exist, the former is nearly always much higher.
When you retain most customers the cost of acquiring new ones is gone and you are left with a large group of people bringing money into the company and not too much being spent on the people.
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Moreover, loyal, long term customers offer references free of charge. When these referrals come in, the come at no cost and already have a positive image of your company. Retaining referrals is much more simple than retaining brand new customers. Referrals don’t need to be convinced too much, they just need to be kept happy.
Beating big company retention strategies with minimal resources
With such cut throat competition in any industry, it is all the more important for small and emerging businesses to use customer marketing strategies.
With the proper methods smaller businesses will be able to compete with much larger corporations through pure loyalty. Small businesses sometimes have the upper hand because they are much more accessible and personable than larger establishments and chains. At the same time, due to the fact that they are not yet well known it is more difficult to attract new customers. This is all the more reason to invest in building open and strong long-lasting relationship with existing customers. The marketing and advertising necessary for customer acquisition is much more expensive than customer retention and may have you spending more than you make. By investing time and energy into your existing customers you will be able to save money and make more.
Put your customers first!
Customer retention is more long term and requires people skills along with the ability to manage customers’ wants and needs, but it is far more cost effective than the alternative and more beneficial in the long run. The value of each customer begins at their very first purchase and ends at their very last, with customer retention skills you will be able to increase the customer lifetime value exponentially and see giant spikes in annual revenue.